China Condemns Trade Agreements That Impact Third Parties Following Vietnam-US Deal

On July 3, 2025, China issued a stern warning against trade agreements that could adversely affect third parties, following the announcement of a new trade pact between the United States and Vietnam. The deal, touted by President Donald Trump as the first comprehensive agreement with an Asian nation during his administration, has raised alarms in Beijing due to its implications for Chinese economic interests.

The warning was articulated by Mao Ning, a spokesperson for the Chinese Foreign Ministry, who emphasized that China has consistently advocated for resolving economic and trade disputes through dialogue and consultation. "Relevant negotiations and agreements should not target or harm the interests of third parties," she stated, reflecting China's broader concerns about the implications of U.S. trade policies on its regional strategy and economic stability.

This newly forged agreement comes as President Trump approaches a July 9 deadline for the imposition of higher tariffs on U.S. trade partners unless new accords are reached. Notably, the deal includes a reduction of proposed tariffs on Vietnamese exports from an initial 46% to 20%, while maintaining a 40% tariff on goods identified as being transshipped through Vietnam to bypass existing trade barriers. This aspect has been a focal point of contention, especially given the comments from Trump’s trade advisor, Peter Navarro, who has labeled Vietnam a "colony of China," suggesting that a significant portion of Vietnamese exports are rebranded Chinese goods.

The implications of the U.S.-Vietnam deal extend beyond bilateral relations, as analysts contend it reflects an ongoing strategy by Washington to address trade imbalances with China. According to a report by Capital Economics, this agreement may serve as a precursor to similar negotiations with other countries, potentially escalating tensions with Beijing. The report highlighted that the terms surrounding transshipment are particularly provocative and could elicit a strong response from China.

China's Ministry of Commerce reiterated its opposition to U.S. tariffs, emphasizing that the country remains committed to equal consultations for resolving trade differences. He Yongqian, a spokeswoman for the ministry, stated, "We are happy to see all parties resolve economic and trade differences with the United States through equal consultations, but we firmly oppose any party reaching a deal at the expense of China's interests."

The reaction from markets has been mixed. Following the announcement of the deal, shares in companies with significant operations in Vietnam initially surged, only to decline sharply once details emerged. Dan Martin, a Hanoi-based analyst with Dezan Shira & Associates, cautioned that the real impact hinges on how the U.S. interprets and enforces the transshipment rules. "If the U.S. adopts a broad interpretation that questions products utilizing foreign parts—even when substantial value is added in Vietnam—it could adversely affect numerous compliant businesses," he noted.

Vietnam's government, in its official statement regarding the new trade deal, indicated its commitment to providing preferential market access for U.S. goods, including large-engine vehicles. However, the specifics regarding transshipment were notably vague, raising concerns among industry stakeholders.

Bloomberg Economics projected that Vietnam could see a potential loss of 25% of its exports to the United States in the medium term, jeopardizing over 2% of its GDP due to the agreement's implications. Rana Sajedi, an expert at Bloomberg Economics, highlighted the uncertainty surrounding the enforcement of transshipment rules, which could have significant diplomatic repercussions. "Beijing has made it clear that it would respond to deals harming its interests. The decision to impose higher tariffs on goods deemed to be 'transshipped' through Vietnam may fall within that category," she explained.

As the geopolitical landscape continues to evolve, the future of U.S.-China trade relations remains uncertain. The potential for retaliatory measures from Beijing looms large, with experts suggesting that any such actions could have far-reaching impacts on the Vietnamese economy, further complicating the already intricate dynamics of international trade in the region.